The combination of the uncertainty of COVID-19, accelerated digital transformation and the impending end of third-party cookies has made customer data platforms (CDPs) an essential part of marketers’ technology portfolios.
Research firms predict annual growth rates of more than 25 percent in the CDP market for the rest of the decade. Tealium’s third annual study “2022 State of the CDP Report: The Art of What’s Possible in the Age of Data” shares how marketers can remain competitive in the rapidly changing digital landscape using CDPs.
Technology Spending Continues To Rise
According to Tealium’s report, 87 percent of marketers expect to increase technology spending in 2022 while 40 percent plan substantial increases—up from 32 percent reported in 2021.
Of the solution areas reported as the most important for marketers’ CDP to address, customer experience (41 percent) ranked highest, followed by loyalty and customer retention (38 percent) as well as growth and customer acquisition (33 percent).
CDPs were critical in helping businesses achieve their highest objectives in 2021, including protecting customer data (cited by 57 percent), expediting customer acquisition (54 percent), creating more personalized customer interactions (53 percent) and offering a more unified experience across channels (51 percent).
Among the top five reasons why respondents invested in a CDP, protecting customer data privacy and/or complying with security regulations were listed first, followed by leveraging real-time data collection to be more responsive and improving capability across technology investments.
CDPs Yield Tangible ROI
As CDPs become more defined, so too are CDP use cases to see a return on investment. Because CDPs drive more timely and relevant interactions, business growth and organizational processes across internal departments have become more efficient.
Roughly 70 percent of marketers reported earning positive ROI within six months of investing in a CDP while 96 percent earned a full return within one year. Of the metrics marketers use to measure ROI, 37 percent cited data quality as the most important—especially true in the financial services industry—followed by customer experience (22 percent) and operational savings (22 percent).
Many External Factors Are Disrupting Business
Privacy regulations, third-party cookie loss and the COVID-19 pandemic are the three most-cited external factors that are rapidly producing change in the business landscape. Data-driven businesses are increasingly relying on CDPs as the fundamental change agent necessary to adapt. In fact, 91 percent of respondents told Tealium digital transformation is a primary driver of CDP adoption.
Regulatory changes around customer data (40 percent) are the external market factor expected to have the greatest business impact in 2022, followed by technology disruption/advancement (40 percent) and the lasting effects of COVID-19 (38 percent).
Retail respondents cited hurdles involving the management of customer identity and changes to privacy consent management regulations as considerations during CDP selection significantly more so than did other industries.
Ninety-two percent of respondents in retail cited pandemic-related disruption as one factor in their CDP choice, compared with 79 percent of respondents in all fields and 68 percent in the technology sector. Healthcare respondents cited the pandemic’s ripple effects as having a sizable influence on their sector in 2022.
Besides accelerating the shift to ecommerce, the pandemic also caused consumers to increase reliance on reviews and promotions and to demand greater value from retailers. Thirty-one percent of respondents to a survey conducted by Vericast consider themselves “price-conscious,” an increase from 23 percent in 2020.
Budgets Are Bouncing Back
After budget cuts were experienced during the first chapter of the pandemic, between 50 percent and 60 percent of marketers increased spending in eight of the nine critical technology categories in 20221.
Digital marketing comprises 58 percent of the overall marketing budget and is expected to increase by 15 percent in 2022. Virtual engagements are the primary area in which marketers intend on investing in customer engagement this year. Five percent of respondents said budgets are a limiting factor in purchasing artificial intelligence (AI) tools.
Age Of Intelligence Is Dawning
Ninety-seven percent of executives report that AI capabilities were crucial to successfully carrying out marketing objectives in 2021. Consumers have grown to expect or rely on AI’s input in their customer experience, and IDC anticipates 90 percent of new enterprise applications will utilize AI by 2025.
Marketers across the board have enjoyed AI’s ability to enhance the customer experience, increase agility and improve productivity. Data-informed machine learning algorithms are delivering value in a number of ways.
Voice recognition systems, for example, are now able to detect emotion in a customer’s tone and transfer them to the service representative best suited to handle their needs. Machine-generated content is now indistinguishable from that created by people. And predictive insights enabled by machine learning allow marketers to target prospects more accurately and suppress individuals less likely to become profitable.
Despite its many uses in retail, AI was ranked less important to marketing efforts there than it was in other sectors.
Customer Trust Is King
Customers now demand increased privacy and respect for how their data is gathered, stored and utilized. At the same time, customers are seeking more from the use of their data by the business they interact with. Marketers have responded to this dichotomy by prioritizing customer data protection, citing privacy protection as the primary reason they invested in a CDP.
About 75 percent of respondents to Tealium’s survey—and 84 percent of those in the retail landscape—reported privacy consent management as an important market factor that influenced the decision to choose a CDP. Respondents’ top criteria for selecting a CDP were customer service (cited by 61 percent) and compliance (57 percent).
For 57 percent of executives, heightened protection of customer data is the most desired and important outcome in 2022. Technology respondents indicated substantially less interest in customer privacy protection than retail respondents, healthcare and financial services. Only 38 percent of technology executives reported privacy as a priority in 2022. Similarly, tech respondents also showed the least interest in improving brand perception compared to other sectors studied, with only 13 percent citing it as a top business trend in 2022.